No Service Tax Liability on Intermediary in Sale of Space/ Time for Media Agency on Commission Basis as “Advertising Agency”: CESTAT [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that an intermediary in the sale of space/ time for media agency on commission basis is not liable to pay service tax under the head “Advertising Agency” under the provisions of Finance Act, 1994.

The appellants, Drishty Communication Private Limited were engaged in providing services as advertising service to get customize and were registered “The Indian Newspaper Society” (INS). They were remitting 85% of the total amount received from their customers on getting space/time from media agencies or news papers or various publications. They were retaining the 15% of the remaining amount as their commission. The appellants were paying Service Tax on the said commission amount.

The department raised a demand observing that the service provided by them under definition “Advertising Agency Service” taxable service under Section 65(105)(e) of the Finance Act 1994.

The appellant contended that they have not provided any services to their client. It has been argued that it is only the sub agent M/s. Surya Publicity which provided the services to their client and since appellant has not provided service, there is no question on payment of any Service Tax.

Member (Judicial), Mr. Ramesh Nair and Member (Technical), Mr. Raju quashed the demand observing that “in the instant case M/s. Surya Publicity was providing Advertising Services to its client. M/s. Surya Publicity was not discharged any service tax liability as the same was liable for the levy of Service Tax. M/s. Surya Publicity was purchasing time and space in the newspaper / media companies through the appellant. The amount paid by M/s. Surya Publicity to the appellant for purchase of time M/s. Surya Publicity to the appellant for purchase of time and space was sought to be tax by revenue under the category of Advertising Service. It is seen that no evidence has been placed from record to establish that the appellant were providing “Advertising Agency Services.” The role of appellant was limited to being an intermediary in the sale of space/ time for media agency on commission basis.”

To Read the full text of the Order CLICK HERE

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